The research of the Baker Institute Tax and Expenditure Policy Program focuses on critical areas in the field of public finance. One of the main areas of research is the simulation of the effects of U.S. tax reform, including fundamental reform of the individual income tax, more incremental income tax reforms, and corporate tax reform. The simulation of various reforms is accomplished using a large-scale dynamic computer general equilibrium model constructed by John Diamond and George Zodrow. Other projects have focused on earnings volatility, income mobility and inequality, alternative funding options for public schools, state and local investment tax incentives, state sales taxation of services, the optimal taxation of electronic commerce, the effects of the property tax, the effects of adopting education vouchers, and public employee pension liabilities.
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